How College Students Get Into Loan Debt

College loans are considered a relatively small part of the financial loan sector, which loans out trillions in credit card and commercial mortgage loans. But for individuals, college loans are often the second-largest expense of their lives, right behind mortgages. Unfortunately, this debt comes at a very challenging time of an individual's financial life, which is why many people struggle with their college loans and have trouble paying them off upon graduation.

Unmanageable Debt

First, college loans can simply be difficult to pay for. Mortgages and auto loans come in many different packages with different payment structures and deals to make beginning payments easier to make. College loans have far fewer options. While subsidized Stafford loans can be much easier to pay off than other options through their low rates and delayed payments, few students can get by on only subsidized loans, especially for the schools they want to attend. Unsubsidized loans not only create additional debt, but also have worse terms that require more payments.

Expense Problems

College students, upon graduation, have both living expenses and loans to take care of. Unfortunately, living expenses are not always something college graduates have a lot of experience dealing with. Many have basic living and food costs managed by the college as part of their tuition, or receive money from their parents to manage extra costs. But upon graduation students encounter rent, utility, food and furniture costs that in many cases they are not ready for. This can put a strain on budgets and make debt even more difficult to pay off.

Income Problems

Income problems are also an enormous problem for college students. Many students find that the jobs they qualify for, typically entry-level positions with minimal pay, do not create enough income to pay off college debts and leave room for other necessary expenses. Some college graduates hold out for a higher salary, but this delays income entirely and increases the severity of the problem.

Refinancing

Refinancing is a common solution for many kinds of college debt. Essentially, refinancing replaces one debt with another. There are several government programs designed to help graduates through this process. The primary benefit to this type of refinance is that it spreads out payments and often provides a lower interest rate, making the debt much easier for struggling students to pay off.